Tag: contracts

Which contracts your clients should sign

A photographer asked a great question about contracts recently:

I would like to redo my contracts. Would like to know what do you get clients to sign before a shoot?

Disclaimer: This note is a fairly broad overview of many of the major themes you, as a photographer, should think about and which contracts photographers should sign with their clients. It isn’t legal advice or even the best advice for all photographers. It should give you a more informed starting point for a further discussion with your lawyer.

There are two key documents that you should have. The first is a contract governing your services and the other is some sort of privacy statement.

Services contract

The services contract needs to cover a number of themes both for clarity and to make sure you address your common risks. I also refer to services contract provisions as “terms and conditions” in this note.

For starters, use clear, well defined terminology is really important. It may seem pedantic but clearly defining key terms is essential for a clear and intelligible contract which, in turn, is more likely to be enforced if you ever have to test it. Obviously the content of the contract is very important but a contract written in confusing language can be very difficult to understand and enforce effectively. You typically include this terminology in a glossary in your contract.

Your services contract must obviously deal with your services, how you will communicate them and what you will charge for them. Think about issues like scope creep (where your services change without necessarily agreeing on the changes specifically) and amending your pricing as your scope changes. The model I prefer is to use a standard set of terms and conditions that refer to a separate booking form (that can be an online form or a paper form that your client signs) instead of preparing a lengthy contract that contains all the variables such as client details, services required and pricing. The booking form model that refers to the terms and conditions is less intimidating even though the terms and conditions, themselves, will be fairly detailed to make sure you deal with all the important themes.

One issue which comes up frequently in photographers’ groups is a cancellation fee. The Consumer Protection Act enables clients to terminate advance bookings subject to reasonable cancellation fees. Define those in your contract and set cancellation periods which may attract varying fees. For example, you may agree that if the client cancels a shoot 3 months before, the client will pay Rx; 1 month before, the client will pay Ry and 2 weeks before, the client will pay Rz. This will depend on your booking lead times; whether you can replace that booking and other similar factors. You will also need to align these cancellation fees with the Consumer Protection Act’s mechanisms and intent.

As a photographer the licensing aspects of your work are critical. The Copyright Act generally recognises your clients as the owners of the copyright in your photos if they commission you to do the work and agree on a fee for that work. This is good for your clients because they have more control over your deliverables but you have to consider what you will need to do with the photos. Because, by default, you are not the copyright owner in this context, you are not entitled to share the photos as part of your portfolio, restrict what your clients can do with the photos and exercise much other control over the photos’ use.

The Copyright Act gives you a way to change this default position. You can agree with your client to opt-out of the default copyright ownership mechanism in your contract. It is pretty straightforward but you need to include that in your contract. You may also want to think about including a mechanism in your contract which enables you to withhold your deliverables if your client fails to pay you, for example. This would be a separate clause in your contract.

Other clauses you’d include in your contract would be –

fees and payment;

privacy (linked to the privacy statement which I discuss below);

dispute resolution;

breach and the consequences of a breach;

termination;

common no-variation and similar clauses; and

domicilium clauses which can be pretty useful for different situations.

Booking form

A booking form is a convenient way to sign a client. Here are a few things to include:

Client details (name, contact details, address details);

Shoot details (date, times, locations);

Fees due (linked to specific deliverables), including deposits due;

Your specific deliverables;

Cancellation fees (you can include these in your terms and conditions but including these in your booking form makes them more prominent and confusion less likely);

Signature and date fields (the form these will take if you use online forms can vary).

Privacy statement

As a photographer you are dealing with a lot of personal information. Using personal information often requires permission from the people the personal information relates to and the way you obtain this permission is a privacy statement (also known as a privacy policy or data protection policy).

As a starting point integrate your privacy statement with your services contract so when the client agrees to the services contract, s/he also agrees to the privacy statement.

Broadly speaking, the privacy statement must deal with these broad themes:

what personal information you will collect and from which sources (for example, automatically through your website, personal information your client volunteers through your booking form or contact forms and so on);

what you will do with that personal information (remember to include adding photos to your portfolio or Facebook page for marketing purposes, for example);

under what circumstances you may disclose personal information to third parties (these third parties may include your vendors for printing; law enforcement and other legal authorities); and

where you store personal information and, broadly, measures you take to secure the data (this will often mean identifying your hosting provider, especially if you use foreign hosting providers and will be transferring personal information across borders).

You will probably include other people in your photos (especially if you do functions and have the usual group photos) who have not signed your contracts. You should require your clients to obtain permission from people they want included in these group photos to be included and their agreement with your data practices which are explained in your privacy statement. How you do this can vary. You can prepare releases for subjects to sign and have them sign in advance or on the day or you can prepare something for your clients to have these participants sign. This can be a cumbersome process so consider the process with the least friction and which still results in permission from these subjects to take photos of them and use those photos for different purposes.

This is more important if you intend publishing photos on public platforms (for example, Facebook). Simply taking photos, making prints and handing these to your client probably won’t require you to go to these lengths because a subject who poses for a photograph clearly consents to being photographed. You’ll need to use your discretion.

It is very important to be sensitive about photos of children. You are not permitted to take photos of children and share them without their parents’ advance permission so make sure you obtain clear consents when it comes to children.

Get it in writing

If you capture the terms of your agreement with your clients in writing, you take huge strides towards reducing the likelihood of confusion and disputes. A written contract can be printed on paper. It can also be digital and part of an email or published on a website. Find the best medium for you that strikes a balance between clearly conveying your contract terms and being relatively accessible and convenient for your clients.

Prologue

Contracts are increasingly complex and difficult to navigate, even with recent efforts to simplify the language we use. Much of this is the result of efforts to express complex and interrelated legal and compliance concepts in words and since every legal writer has his or her individual style, the variations in contracts are staggering.

Recently one of my clients asked me for a single paragraph that somehow encapsulated a vendor contract. My response was that such a thing is extremely risky and not pragmatic. There is simply too much in a contract of that nature to adequately express in a single paragraph. Instead, I suggested a couple of options that streamlined the interface for the complete contract.

Later that night I thought about the request further and what it would take to create a “1 paragraph contract” for my client. I realised that such a thing would look very different to the contracts we have now. In fact, the path to a an effective contract that could be expressed in such a short form could lead to a radical overhaul of the broader legal and compliance environment that underpins almost everything we do.

Imagine that instead of expressing those complex and interrelated legal and compliance concepts in words, we reverse the process and establish a syntax to express those concepts more abstractly and yet in a way that still includes all that stuff the “fine print” is designed to cater for in our every day dealings? We could develop a new way of going about our business that doesn’t require lawyers writing pages of contracts that may still be susceptible to interpretational differences.

Going further, what if the way we contract ties directly into a broader contracts profile we all have from our first contract and which gives assurances as to what we can legitimately contract for? This is just the beginning of what could be possible. Legal frameworks could be developed, implemented and enforced programmatically. It would mean a radical transformation of the legal profession, possibly the end of much of the profession as we know it today. On the other hand, it would mean that people could go about their lives, dealing with each other with more confidence, far less uncertainty and without needing to spend so much on unintelligible legal fees.

The story below is a hypothetical scenario which should give you an idea of how this could work. Whether this scenario becomes a reality one day is another question altogether. I suspect that two developments will be key drivers: the so-called Internet of Things and cognitive systems like IBM’s Watson.

How I sold my car in 2034

I arranged to meet Andre on a sunny Sunday morning, 28 May 2034, to sell him my vintage car. I hadn’t met him in person before but I knew it was him because I received verification of his identity when we shook hands and sat down through an interaction between our CitIdents, the SmartNet and some or other authentication process my contract technician told me happens in the background. We met in a local teahouse and chatted while the waitron delivered our orders. Andre asked me about my run earlier that morning (my best time yet) and I congratulated him on his daughter’s latest masterpiece which he shared the night before. We then turned our attention to the deal we were about to make.

Andre kicked off the discussion with a quick data request to access the car’s entry in my Registry. He reviewed the car’s purchase and service history along with its logged mileage and general condition. It pretty much matched the data representation I posted with my sale ad the week before and he was also able to confirm that I was the car’s owner and entitled to sell it to him in the first place. He didn’t say anything but I suspect he also ran a quick valuation check through SmartNet to confirm my asking price was reasonable. This sounds like a lot but he finished his initial review in the time it took me to empty a sachet of sweetener into my tea and stir it.

He smiled and said he was comfortable with the car’s history and condition as well as my price. We exchanged data requests for access to the relevant portions of our contract profiles in our respective CitIdents (this has become standard practice when contracting these days). We both received confirmation that we had the necessary legal capacity to sell and buy the car (Andre’s verification included confirming with my bank that I have paid my vehicle finance and the bank had transferred ownership to me). Andre’s bank confirmed with me that he had sufficient funds to pay for the car on our agreed terms and established a payment link to my bank account for a one way funds transfer.

We decided, for the sake of tradition, to conclude our contract with a handshake. Our wrist tokens registered each other’s proximity as I said “I, Paul Jacobson, agree to sell you my car for our agreed price today.”. Andre smiled again and, in return, said “I accept your offer to buy your car today.”. With that our respective CitIdent’s registered the details of our agreement: the car being sold, our agreed purchase price, the current date and time as well as our verified identities. The SmartNet quickly polled our CitIdents for the further information it required to complete the legal and logistical aspects of our deal, advised the relevant local authorities so they could update their records and I received a data notification that the car had been removed from my Registry and transferred into Andre’s along with confirmation of the first of Andre’s payments.

We chatted a little more, finished our tea. Andre took a call from his partner and while he was chatting, I took a moment to review the transaction records newly associated with my CitIdent’s contract profile. Sure enough the sale was symbolically represented using the usual cheerful info-icons with the broad parameters of our transaction supplemented with the usual conditions, restrictions and permissions provided by the SmartNet’s latest contracts AI. The latest models finally introduced cross-jurisdictional compatibility between different regions’ contract models.

Andre finished his call, I sent payment to the waitron with a tip and thanked Andre. For a moment I couldn’t understand why the car didn’t respond to my proximity and unlock and then I realised it wasn’t mine any more. Senior moment. Since it was a lovely Autumn morning I decided to take a pod home and spend the rest of the day with my wife and children.

One of my clients referred me to this video and it is terrific. Besides its opening sentiment, the video highlights the importance of a good contract and has an attorney giving his perspective. This is definitely worth watching.

Ken, I really mean open sourcing, not crowd sourcing. The place to start (I think) is to simply “out” the template banks that every law firm keeps. 2007 was the dark ages, in web terms; it will not be possible to keep templates off the web much longer. And business lawyers shouldn’t try. (Prediction: the most successful won’t.) The profession should embrace transparency and move on to charging clients for counseling, negotiating, customizing. Not for unveiling the boilerplate.

Carlton points to news that international legal group, DLA Piper, reportedly intends dropping the walled garden around its precedents which it restricted to its clients (a major legal group already sharing its precedents with its clients). The Koncision post was partly in response to an earlier post by Carlton titled “Open Sourcing Legal Docs” which explores the idea of making legal precedents publicly available as part of a broader process of identifying best practices and almost standardizing sets of documents based on those best practices. Carlton concludes that post with the following observation:

And the legal profession will do just fine. Right now the industry is still behaving as though there is proprietary value in standard boilerplate documents, and the opposite is true: there is tremendous public value in the documents, and unleashing that value helps clients and lawyers alike. The sustainable proprietary value is in counseling what, when, how, and why not or why something else instead.

The other post which inspired this post is the second part of a series of posts titled “Developing CAD for Law” on the Contract Analysis and Standards blog. This second post talks about how legal documents have an almost modular construction and the goal of a contract development platform would be to take blocks of text or clauses that can be combined, forming coherent legal documents appropriate for specific circumstances. I pointed out a service which does something similar in my previous post. Another interesting approach is a comparative approach to certain types of documents aimed at distilling the best clauses to be incorporated into the intended document. The example I came across is a template for an End User License Agreement on the kiiac site.

This all points to an increasing shift away from document-based legal services to what the legal services business should be: applying legal knowledge to specific situations and formulating effective legal frameworks to meet clients’ needs. Legal documents become analogous to software applications with variable functionality. The real value is in the knowledge and skill that produces not only those applications but also develops the appropriate and broader framework.

I mentioned in my previous post that I will be releasing my documents under a Creative Commons license. I have selected the Creative Commons Attribution-ShareAlike 2.5 South Africa License for my documents and my first release under the “web.tech.law legal docs” brand is an agreement for photographers which I published to the web.tech.law Facebook page yesterday evening. This first document is available for free although future documents be paid “apps”. I will expand this offering in due course to include a support model for these documents. The document is available for download and comes with an explanatory note:

Like this:

Having your contracts prepared and signed is only part of your contract management process. It is usually also only the beginning of what could be a long relationship with your contracting party. It makes sense to give some serious thought to an ongoing contract management process for you business. Reasons for this include –

Being able to deal with disputes or queries regarding parties’ obligations and rights, and so on.

If you haven’t taken stock of your contracts with other parties, a good starting point is to conduct a form of due diligence through which you collate all documents with contractual significance (these includes both contracts themselves as well as any other documents which could have a bearing on contract terms such as emails, appendices, memoranda of understanding, letters and other documents. Many people forget that a binding contract need not be a formal document setting out the contractual framework and signed by both parties. Documents with contractual significance (and which could form part of an overall contractual framework) could include letters, notes, faxes, emails, instant messages and even sms’s. All of these documents and data should be collated and analysed to determine their significance and impact.

Having conducted a review of your company’s contractual frameworks, it is a good idea to develop and implement an effective contract management processes which may include –

Aside from managing the documentation informing your contractual frameworks, it is also advisable to implement appropriate policies within your organisation to guide how contracts are entered into and who may do so on your company’s behalf. In an environment where emails, instant messages and tweets can give rise to binding contracts, companies must clarify who has contractual authority within their organisations and with their contracting parties. Those people with authority to bind the company should be subject to a review process to ensure they are complying with the company’s guidelines.

Contract management processes take a fair amount of planning and work to implement but they will be more than worth the effort. There are a number of useful contract management resources online which you may find useful including the UK National Audit Office’s “Good practice contract management framework”.

I wrote about the coming legal practice singularity recently. Legal practice is changing rapidly and the prospect of a sufficiently advanced artificial intelligence to start taking over many legal research and similar tasks is fascinating. Unfortunately for many lawyers the wait may not be quite as long as it may take for such artificial intelligence to arrive on the scene.

Lawyers are accustomed to services that offer standard contracts for reduced prices. Some retailers and bookstores have been selling common agreements like leases and powers of attorney for quite some time now and there are a number of online options too, including Law Unlocked which was pointed out to me today. The next step is a site which promises a DIY solution which should scare lawyers who rely on legal documents themselves for their fee income.

Desktop Lawyer offers a self-service option to customers whereby they can have fairly complex agreements like shareholders agreements prepared for them by answering a series of questions. The process is apparently so dynamic that you actually see the document take shape as you work through the questions. The end result is a document that goes beyond the current “one size fits all” model because the service’s users will be able to download a fairly customised agreement that better suits their specific needs. This is unlikely to be the end of the road for the technology and we will likely see more and more advanced solutions that will replace lawyers whose focus is document production as an end in itself. In other words, the market for “search and replace” precedents will give way to these sorts of smarter and more cost effective solutions.

This likely future touches on my thoughts about the current legal services model and the very real need for lawyers to rethink the value proposition in their work. The days of value being based on time or documents are just about over and lawyers who can’t adapt will struggle to survive. The value in legal services is in lawyers’ knowledge of the law and how to use the law to develop appropriate and effective legal frameworks for clients. The documents reflecting or embodying those frameworks are worth about as much as the paper they are printed on.

In keeping with this emerging reality, I am rethinking what my clients will be charged for going forward. We will start removing documents as line items in our invoices and effectively treat them as free. Documents we produce for our clients will be released to those clients under a Creative Commons license to enable clients to make more flexible use of those documents and I am working on a service for clients which will effectively release fairly standard documents to participating clients as a value add at no charge for the documents themselves. I am still working on the parameters of this pseudo-open source approach to legal practice and will ensure that important considerations like client confidentiality and custom legal frameworks are adequately protected but the days of charging for relatively standard legal documents are coming to an end.

Website terms and conditions are pretty tough to do properly. They are on just about every website you come across on the Web and are so prevalent that it is easy to take them for granted and also assume that they are all pretty much the same. Often how a website terms and conditions (I’ll refer to them as “website terms” for the rest of this post) is drafted is a matter of personal style but a lot of thought and planning goes into a well drafted website terms.

Lawyers have different approaches to website terms. Some will look for seemingly complete website terms on the Web or in precedent libraries, change the names and details and push it out to their clients. Other lawyers will spend more time on a website terms and prepare a set of website terms that are at least prepared with the client’s business in mind. Yet another group of lawyers will take a more involved approach which may include:

taking more detailed instructions from the client about the client’s business and what the website is intended to do;

carefully consider the risks that could arise;

carefully consider the various pieces of legislation and third party terms and conditions the website terms will have to comply with or take into account; and

prepare website terms which establish a sound legal framework for the website and its proposed activities.

Leaving aside website terms’ content, the way website terms are presented is also fairly important. Paper-based legal documents are frequently formatted using multi-level paragraph numbering because those paragraph numbers are the most convenient referencing system on paper. Clauses often refer to each other and lawyers need a convenient way to refer to parts of the document. Its just easier to refer to “clause 3.4.2” than it is to refer to “the clause that sets out the exception to the duration clause”.

When it comes to website terms and conditions, the multi-level numbering convention still works (although it is probably a pain for developers to convert these documents into a website friendly format) but the result is often a fairly intimidating block of text. Three good examples of this sort of website terms are the Zappon, Times Live and Facebook website terms:

Zappon:

Times Live:

Facebook:

Another approach to website terms is to dispense with multi-level paragraph numbering. An example of this approach is the Foursquare website terms:

Both of these approaches have merit. A couple formatting issues affect readability (usability experts can probably cite a dozen more): the effect of multi-level numbering on the document’s apparent density, line spacing and the font used. In the Zappon website terms the multi-level numbering and line spacing make the text look pretty dense and not terribly enticing. On the other hand, the Times Live website terms (very possibly prepared by the same legal team) also uses multi-level numbering and is better spaced. The Times Live website terms are far easier to read than the Zappon website terms. The Facebook terms sit in between the Times Live and Zappon website terms.

On the other hand, the Foursquare terms dispense with multi-level numbering in favour of a simpler document structure (I tend to prefer this approach myself). The challenge with this approach is the loss of an easy paragraph referencing system with multi-level numbering presents. The solution is to use hyperlinks instead, the Web’s referencing system. Although the basic layout makes the Foursquare website terms easier to read, the font detracts from that. The Zappon terms have a similar issue. This may be a personal preference but I find non-serif fonts to be much more readable that serif fonts when it comes to website terms. The Facebook and Times Live website terms use non-serif fonts. I have spent a little time reading about fonts in legal documents and while I just barely scratched the surface, it is a pretty interesting topic.

So why all the talk about readability? Website terms are contracts between website visitors and the website proprietor. Just as the Consumer Protection Act requires that contracts be drafted in plain language to make them more accessible and intelligible, formatting website terms to make them more readable achieves a similar objective. Website terms, when they deal with all the legal issues they need to deal with, are lengthy documents but they are important documents. If a visitor is immediately put off by the website terms’ formatting, the visitor will be that much less inclined to read the document which will contain terms he or should really should read. The end result is that the website terms will not do what they are supposed to do.

This discussion may seem pretty abstract but it becomes pretty important in the context of consumer protection imperatives like the plain language requirement. It is also important from a contractual perspective. A contract should be clear and readable if it is to adequately support the agreement between the parties to it. Everyone should understand their rights and obligations and a dense body of text with numbered paragraphs renders the document virtually inaccessible.

The current legal services model is fundamentally flawed. At least certain common perceptions of the legal services model are. In my modest experience, clients, and a great many lawyers, see the legal services business as essentially being about two things: production of documents and/or time based attendances. Those perceptions do both clients and the legal services industry a disservice.

Perceptions of the value in legal services are skewed either in favour of time or documents. Both miss the real value of legal services even as they typically benefit law firms and warp client perceptions of where the value in legal services lies. Clients tend to instruct their attorneys to prepare agreements for some or other transaction with the expectation of paying either for the document they requested (the documents clients sometimes believe they need are not necessarily the correct documents) or the time it takes to create documents supporting the transaction. In the case of time, fees are indeterminate and increasingly a cause for concern for clients who are growing wary of paying exhorbitant fees based on a billing model that rewards inefficiency.

In the case of payment for a contract, clients balk at paying thousands and tens of thousands of Rands for agreements, as if a 20 to 30 page document can’t possibly cost that much. Part of the reason for this, I think, appears to be a sense of a document’s value based on its length. A one page agreement must cost less than a 20 to 30 page document and if a client wants to keep legal costs low, it makes sense to request a one or two page agreement instead. Unfortunately, this approach to legal services is fraught with difficulty. Contracts are increasingly complex as the legal landscape becomes more complex. Reducing page counts may be a way to simplify a document but its a bit like removing supporting pillars from a building because it makes it look cluttered rather than appreciating that the pillars keep the building up.

Time based fees are usually very lucrative for lawyers but one of the complaints about the billable hour is that they are indeterminate. Time based fees are practically synonymous with the rhetorical question, how long is a piece of string? They have also become synonymous with legal billing for legal services. No matter what you need done, the classic charge for legal services is the hourly rate. Clients pay whatever the lawyer’s time is worth and lawyers are rewarded for being inefficient with their time. Lawyers in most firms have their performance measured by reference to how much they bill, relative to budgets. When a billable hour is divided into ten units of six minutes as a unit is logged for every six minutes, or part thereof, the billable hour becomes a very profitable proposition for clients. That said, it is also the standard way to charge for legal services and as expensive as it may be, a lot of clients are used to it and even expect it.

The value of legal services is more about the skill and knowledge that are employed to create and manipulate legal frameworks which may seem abstract but they govern almost every aspect of our daily lives, including those commercial aspects that clients concern themselves with. Legal services should not be valued by reference to page counts or the time involved in rendering them. When clients have a commercial legal challenge to overcome, that is usually best achieved by developing a better legal framework for what they intend doing (for example, structuring a transaction or some other contractual framework) or help understanding the parameters of the legal frameworks they operate within (for example, legislative requirements).

The billable hour is a convenient way to charge for legal services but it has little relation to value. Similarly, a document’s page count is as much a measure of the framework’s value as software code is a measure of the completed application’s value (what is worth more to you: the reams of text comprising Microsoft Word’s underlying code or Microsoft Word, the application itself?). Contracts are not the embodiment of the legal framework, their purpose is to describe it in sufficient detail, including both explicit instructions as well as the legal mechanics required to help achieve the parties’ objectives and to satisfy legislative and regulatory requirements.

The current legal services model is broken and perceptions about it detract from the value of legal services from clients’ perspective. These perceptions also place lawyers under pressure to perform according to the wrong metrics and that undermines their ability to deliver real value as opposed to artificial, perceived value.